Summary
holding that a corporate officer "lacks standing to vindicate the rights of his ... corporation"
Summary of this case from Annuity, Welfare & Apprenticeship Skill Improvement & Safety Funds of the Int'l Union of Operating Eng'rs Local 15, 15A, 15C & 15D, AFL-CIO v. Tightseal Constr. Inc.Opinion
04 CV 4640 (RO).
October 28, 2004
MEMORANDUM AND ORDER
Plaintiff Joseph Wein brought this action against defendants Lee Fensterstock and Bonds Direct Securities, LLC, seeking damages, inter alia, for breach of contract in connection with executive search and placement services. The complaint alleges diversity jurisdiction pursuant to 28 U.S.C. § 1332 and § 1347(a) based on plaintiff's status as a citizen of Rhode Island and defendants' New York citizenship. Based on the documentary record binding against plaintiff Wein, however, defendants move to dismiss for lack of jurisdiction, or alternatively for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6).
Wein in writing sent to Fensterstock — "Dear Lee" — the commission agreement, dated January 8, 2002, at issue here, which although never signed by either party, was the one they thereafter operated under and the billing was under. The agreement on Wein's side is unambiguously between his corporation, D.S. Wolf Associates, Inc. and Bonds Direct. Moreover, the parties' behavior under the agreement supports this reading. Plaintiff alleges that Bill Kimball was included among numerous candidates introduced to Fensterstock and Bonds Direct pursuant to their agreement. Compl. ¶ 22. When Kimball was hired by Bonds Direct, it "became obligated to pay, and paid . . . a commission and fee based on Kimball's first year compensation." Compl. ¶ 23. However, contrary to plaintiff's recitation in their complaint, the commission fee was in fact paid to D.S. Wolf, not to Wein. Wolf sent an invoice (dated August 7, 2002) to Bonds Direct for the placement of Bill Kimball and on August 20, 2002 Bonds Direct paid Wolf by check. Fensterstock Aff., Exs. A B.
The first sentence reads: "The following is D.W. Wolf's letter of agreement relative to our search for Fixed Income Salespeople." The letter goes on to mention "D.S. Wolf" seven times in connection with strategy, fee arrangement, and expenses ("D.S. Wolf will conduct all research . . ."; "D.S. Wolf will charge a fee . . ."; "D.S. Wolf will then send a final invoice;"c.). Compl. Ex. A. The letter has two signature places, one for Joseph Wein as Managing Director of D.S. Wolf and one for Lee Fensterstock as CEO of Bonds Direct. Compl. Ex. A. When pressed by this Court to comment at oral argument, Wein's lawyers did not deny the fact that Wein sent this letter to Fensterstock as the terms of the executive search agreement, and that it was in Wein's corporation's name, not individually.
Accordingly, based on this commission agreement, which plaintiff admits was sent "in response to Fensterstock's request for services" (Compl. ¶ 16), Wein lacks standing to assert a breach of contract claim. See, e.g. Empire Volkswagon, Inc. v. World-Wide Volkswagon Corp., 627 F.Supp. 1202, 1212 (S.D.N.Y. 1986) (stating that breach of contract claim may only be asserted by contracting party or third-party beneficiary), aff'd, 814 F.2d 90 (2d. Cir. 1987). Plaintiff, as an officer, also lacks standing to vindicate the rights of his D.S. Wolf corporation.See Sterngrass v. Bowman, 563 F. Supp. 456, 459 (S.D.N.Y.),aff'd 742 F.2d 1140 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984). But that creates the problem that were the real party in interest, D.S. Wolf, joined, this Court would lack subject matter jurisdiction, for D.S. Wolf Associates, Inc. is a New York corporation which destroys diversity. Accordingly, defendants' motion to dismiss is granted.
So Ordered.